Biofuels: A silent but solid revolution takes off in India

DC_Patra Jitendra_AsatiBy D C Patra @BPCLimited &
Jitendra Asati, India Economic Service

Energy is integral to economic progress and well-being of people. For a fast growing economy like India, energy accessibility and affordability are very significant. At present, India’s energy profile largely centres around two major sources: coal (58%) and hydrocarbons (35%). At a brisk 5% annual growth in energy consumption, India’s import dependence remains high; to the extent of 22% for coal, 83% for crude oil and 45% for gas.

It is therefore imperative that India looks for alternate sources of energy to improve energy self-sufficiency while pursuing the green path to progress. Biofuels have the potential to significantly contribute towards attaining these goals.

Biofuels are produced from biomass, ranging from crop waste, manure and other by-products, and thus are renewable. Promotion of biofuel gives impetus to agriculture by way of capturing value from wastes from agriculture and agro-based industries, including municipal waste.

India’s biofuel initiative was started in early 2000s, but policy thrust and a clear roadmap were missing in action. In 2014, when the new government assumed charge under the decisive leadership of Prime Minister Narendra Modi, the biofuel sector got a fresh push with clear focus and defined goals.

The last five years have witnessed perceptible progress in (a) ethanol blending in petrol, (b) biodiesel blending, (c) 2nd generation ethanol, and (d) Compressed Bio-Gas (CBG) under SATAT (Sustainable Alternative to Affordable Transportation).

The Government of India announced the National Biofuel Policy in June 2018. The policy targets 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030. The new Biofuel Policy allows use of other feedstock than molasses, including sugarcane juice, damaged food grains, rotten potato, corn, surplus food grains, etc. The Policy provides incentives for development of new feedstock for biofuels, new technologies for conversion to biofuels, and creation of a favourable ecosystem for biofuel production and consumption.

It is estimated that approx. 178 MT crop residue is available annually in India for production of biofuels. Similarly, total Municipal Solid Waste (MSW) generated in urban India is estimated to be 68.8 MT per year i.e. 188,500 tonnes per day. If these wastes are converted into biofuels using appropriate technologies, they can replace the total current consumption of petrol and a significant amount of diesel consumption in India.

Oil Marketing Companies (OMCs) have planned to set up 12 2nd generation (2G) ethanol bio-refineries across India for production of bioethanol from agricultural residues at an estimated investment of Rs 10,000 cr.

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Ethanol blending in petrol has seen significant success in the last few years due to the Government’s price incentive policy for ethanol from various routes of raw material i.e. B-Heavy / partial sugarcane juice, 100% sugarcane juice / sugar syrup, C Heavy / damaged food grains, etc., and also on account of assured offtake guarantee by OMCs as well as reduction in GST rate from 18% to 5% on ethanol used for blending.

As a result, ethanol blending in petrol has jumped up from approx. 15 crore litres in 2012-13 to approx. 200 crore litres in 2018-19, taking the blending percentage up from 0.67% in 2012-13 to 6.23% in 2018-19. With supportive government policies, the blending percentage is soon expected to touch 10%, which will result in significant substitution of imported crude and forex savings.

Biodiesel blending, commenced since 2015, is also gaining traction. During 2018-19, OMCs procured 8.2 crore litres of biodiesel for blending with diesel and have placed purchase order to procure 16 crore litres during the current financial year.

OMCs have floated an Expression of Interest (EOI) in August 2019 for procurement of biodiesel made from Used Cooking Oil (UCO) based on firm minimum price for 3 years and commercial agreement for 10 years. India uses around 2700 crore litres of Cooking Oil annually, out of which 140 crore litres of UCO can be collected initially from bulk consumers (hotels, restaurants, canteens, etc), to be used for 110 crore litres of biodiesel in one year. What is considered today as unhealthy UCO entering our food chains and causing various health problems across the country will be converted to useful fuel, creating a revolution of ‘Randhan se Indhan’.

The CBG initiative under SATAT is another important programme. Initiated in October 2018, the SATAT policy envisages 5000 CBG plants across India at an investment of Rs 1.70 lakh crores. It estimates production of 15 MMT CBG per annum by 2023. The CBG plants will also produce about 50 MMT of bio-manure per annum, which will reduce import of chemical fertilizers. OMCs have, so far, cleared agreements with private entrepreneurs for around 378 plants with total processing capacity of 2410 tonnes per day. The CBG initiative will complement the Swachh Bharat Mission for clean India in a big way.

India has also successfully flown its first flight using 25% Bio-ATF between Dehradun to Delhi in August 2018. This presents a great opportunity for the biofuel industry to tap this demand of Bio-ATF at global level.

Thus, India is well-placed to make a significant march on on its bioenergy revolution, which will ensure energy justice, climate justice and a sustainable energy future.

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Views are personal. Published with permission of the authors.